LivingSocial to Post Third Quarter Loss on Writedown

LivingSocial Inc. had a net loss of
about $566 million in the the third quarter, because of an
impairment charge on acquisitions, Chief Executive Officer Tim O’Shaughnessy told staff in a memo.

Sales at the daily-deal website were about $124 million in
the quarter, almost double revenue from a year earlier,
O’Shaughnessy wrote today in a note, which was obtained by
Bloomberg. The company took a charge of $496 million on some
acquisitions made in the past year because they dropped in
value, the CEO said.

“We had to revalue some of the companies we acquired last
year,” O’Shaughnessy wrote. “As you know, the market has also
dropped over that same time for similar public tech companies.”

O’Shaughnessy sent the memo to staff today after Amazon, a
backer of LivingSocial, reported a $274 million net loss in the
most recent quarter in part because of its investment in the
site. Amazon is expected to report more detailed financials
about its LivingSocial stake tomorrow, O’Shaughnessy said.

Maire Griffin, a spokeswoman for LivingSocial, declined to
comment on the memo.

The coupon site had positive operating cash flow during
September, a first for the company, according to O’Shaughnessy.

“We ended the last month of the quarter with more money in
the bank than we had at the beginning of the month, marking an
important milestone on our path to profitability and long-term
success,” he wrote.